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Russian MMM Pyramid Scheme Founder Reported Dead

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Monday, March 26, 2018   04.06PM / RadioLiberty, Russia / Picture from PageOne.ng 

Russian businessman Sergei Mavrodi, whose MMM pyramid scheme deprived millions of Russians of their savings in the 1990s, has died of a heart attack, according to Russia media. 

Reports said the 62-year-old was rushed to the hospital late on March 25 with pain in his chest and died several hours later. 

Mavrodi's MMM financial pyramid was a typical Ponzi scheme in which earlier investors receive their profits from subsequent investors. Mavrodi promised returns of 20 percent to 75 percent a month, as well as lotteries and bonuses for investors. 

As soon as the number of new clients stopped growing, the pyramid collapsed, causing huge financial losses for at least 10 million people, in some cases leaving them destitute. 

In 1994, Mavrodi was elected as a lawmaker, a decision he later said was to ensure he received immunity from prosecution. In 1996, he lost his parliamentary mandate. 

In 2007, a Moscow court found him guilty of financial fraud and sentenced him to 4 1/2 years in a penal colony. 

In 2011, Mavrodi launched another pyramid scheme called MMM-2011, calling on investors to purchase so-called Mavro currency units in a bid to get rid of the "unfair" financial system. Some 15 months later, Mavrodi halted the project. 

From 2011-16, Mavrodi launched Ponzi schemes under the MMM brand in India, China, South Africa, Zimbabwe, and Nigeria. 

In many of those countries, Mavrodi's operations were subsequently shut down or suspended. 

Based on reporting by Moskovsky Komsomolets and RBK 

Additional Reporting:
 

'The System Must Be Destroyed'
The trained mathematician in 2011 launched a new pyramid scheme, MMM-2011, which he claims will eventually bring down the entire global financial system.

"My goal is a financial apocalypse, a destruction of the global financial system," he told RFE/RL just hours before his March 14, 2011 arrest. "I consider the current financial system unfair; it's not fair that some people own billions while others have nothing. The system must be destroyed and something else must be built in its place. That's precisely what I'm working on."

The principle behind MMM-2011 is the same as in any Ponzi scheme -- earlier investors receive their profits from subsequent investors. Mavrodi promises fantastic returns of 20 percent to 75 percent a month, as well as lotteries and bonuses for investors.

What sets this new scheme apart is that unlike the original MMM, which was presented as a financial institution with offices selling vouchers bearing Mavrodi's picture, the new version is entirely Internet-based. Investors have their money converted into a virtual currency called the "mavro dollar" that is supposed to increase in value.

Mavrodi describes MMM-2011 as a "financial social network" in which citizens give each other money.

Devout Followers
The scheme is also more up-front than its predecessor -- the website warns investors of the risks, and its founder openly admits it is a pyramid scheme.

Mavrodi says his new brainchild already has 20 million members, a claim that is impossible to verify due to the scheme's opacity.

One thing is for sure: his charisma and his efforts to portray himself as a modern-era Robin Hood earned him devout followers; who cared less about regulatory warnings.
 

Proshare Nigeria Pvt. Ltd.

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